1. Compute (a) Cash Profit after tax; (b) Cash used for Operating Investments; and (c) Free Cash Flow to the Firm

2. Calculate Cash Profit before tax. (Hint: This is EBITDA)

3. An analyst is worried that the company is not spending enough in operating growth. In fact, the analyst worries that cash flow used for growth may even be positive. Determine cash flow used for operating growth and verify if indeed it is positive. What does a positive cash used for operating growth suggest? (Hint: Fixed asset purchase by itself does not reflect investment in operating growth because aging assets will be retired and need to be replaced.).

The Statement of Cash Flows for Delphi Corp. for the year 2015 is provided below. Use this information to answer the following questions. 232 48 (25) 22 Net income ($ million) Depreciation Stock compensation expense Gain on Divestment Deferred Tax Changes in asset/liabilities: Inventory Prepaid Expenses Account Payable Accrued Payments Net Cash flow from Operating Activities (23) (12) (8) 285 Purchase of Marketable Security Sale of Marketable Security Purchase of Fixed Assets Divestment of Business Net Cash Flow from Investing Activities (285) 321 (99) 114 51 (133) Exercise of employee stock option Stock Repurchase Purchase of Debt Cash Dividends Paid Net Cash Flow from Financing Activities 145 (144) (77) 259 (34) Net change in Cash Currency Effect + Opening Cash Balance = Closing Balance 228 453 Additional Information Interest expense (pre-tax) Interest income (pre-tax) Asset Retirements Tax Expense (Income Statement) 112 The divested segment was sold entirely for cash. Assume 35% tax rate for determining after-tax interest expense/income